Benchmark International

Following three years of gradual growth we now seem to be firmly within the growth phase of the M&A industry lifecycle which is great news for business owners who have been putting off the sale of their business for a time when they are better placed to receive the best price.

The growth phase of the industry lifecycle is characterised by high demand for acquisitions and reduced supply of good quality companies meaning that it is traditionally the most profitable time to sell as heightened competition surrounding good quality opportunities drives deal values.

Confidence and appetite certainly returned in a big way in the 2^nd half of 2013 as the number of transactions worldwide jumped 41.7% in Q3 2013 compared to the previous year. This surge in appetite is something we have witnessed first hand here at Benchmark International with November having been a particularly busy month with record numbers of deals completed and record multiples achieved.

The M&A landscape certainly looks positive moving forward as the trend of heightened deal activity is promising to continue through 2014 with a number of deals currently in the pipeline set for early 2014 completions.

The positive message is however coupled with a warning for business owners considering a sale. Do not delay a decision for too long as the market may soon be flooded, increasing the supply of companies and reducing competitiveness surrounding each deal.

2011 saw the first wave of baby-boomer generation business owners starting to reach retirement age. With huge numbers of owners reaching the age of retirement and seeking a sale the market could become saturated with supply of companies potentially outstripping demand, reducing values received significantly. Couple this with the opportunist business owners looking to at the capitalise current market conditions and it is evident that the seller side of the M&A industry could become vastly over-crowded.

A seller’s market: Why now is the time to sell your business

So, it seems that the outlook for sellers could in fact be both positive and negative, however, there is one way for business owners to avoid the negative and that is to act fast. The M&A landscape is perfectly set for business owners to realise maximised value for their business, just make sure that you do not deliberate for too long as you may miss out.